Junior Mining companies are low market cap and thinly traded exploration companies that are primarily involved in the exploration of gold, silver, or other elements & minerals. Juniors seek potential opportunities by acquiring properties that can yield large resource deposits. These companies usually start off as private companies and then go public to raise capital for their different stages of exploration to reach the ultimate goal of mining.
Junior Mining Companies go through various stages throughout their lifecycle of discovering minerals. Check out our blog explaining every stage in detail: The Company stages and Lifecycle of Junior Mining Companies.
Characteristics of Junior Mining
- Strong Management- Companies backed by an experienced and technical team with strong backgrounds are more likely to succeed. Management of these companies is responsible to bring in capital and meet financing requirements throughout the process.
- High risk and Volatility- Junior companies are very risky and volatile since the possibility of not finding any resource tends to be very high. But, remember higher risks are associated with higher profits in the long term.
How to decide which Junior Mining Stock to buy
- Analyze drilling results
- Check locations of the properties
- Watch for the market cap of the companies
- Estimate the political risk involved with the project
- Look at the long-term plans and future demand of the mineral
- Research about the geologists’ backgrounds and their expertise
- Look for the companies with strong balance sheets, low debt and positive cash flows
Note: If you don’t want to do your own research by analyzing every aspect then you can follow someone else’s analysis. Be aware of the biased and sponsored analysis while following others.
How has your experience been with Junior Mining Stocks? Share your experiences with us and happy investing!